Market Trends

Many Public Sector Fleets Want a Partnership With Fleet Service Providers

October 4, 2002

by Mike Antich

I have received a tremendous amount of feedback frompublic sector fleet managers to the Market Trends columnappearing in the August 2002 issue on the need to create apartnership with fleet service providers. You will be able toread many of these comments in the letters to the editorpage over the next several issues.Traditionally, public fleet operations have tended to beundercapitalized and understaffed. As a consequence, publicfleet managers stress that they are already outsourcingor subletting, some as much as a third of their fleet work. Inaddition, declining tax revenues are prompting additionalpressures to consider outsourcing as many governmentfleet managers report that their budgets are being reduced.They are looking for alternate ways to maintain the samelevel or improved levels of service within the confines of aflat or reduced budget. A number of public fleet and equipmentmanagers report that they have been challenged bytheir upper administration to consider outsourcing as a wayto reduce costs.In addition to declining tax revenues, other factors are increasingthe level of subletting. For instance, more vehiclemaintenance work is being outsourced as a result of the increasedcomplexity of today’s vehicles, the shortage ofqualified technicians, and the stringent environmental requirementsto operate a full-service maintenance facility.Some fleet managers who have elected to sublet this worksay that it allows them to concentrate on their core goals,such as providing superior customer service, improved vehicleutilization, vehicle procurement, and maintain compliancewith various federal environmental regulations. Theseare the same fleet managers who are confident about theperformance of their fleet operation and see themselvesmore than capable of competing with private sector companieson a competitive bid basis. As one public fleet managersaid, his philosophy is to do in-house what he does mosteconomically to keep his internal customers satisfied andoutsource those services that can be better accomplished byspecialists. Also, affirmative action requirements influencethe procurement process for public sector fleets. Many governmentagencies are required to offer Small & MinorityVendor programs, which favors outsourcing.Stumbling Blocks to Doing Business
In the past, several fleet management companies madestrategic decisions to pursue government fleets, creating entiredepartments to achieve this objective, only to see these effortsfail and now view any further use of resources, strategic focus,or dollars to be a questionable investment.However, as one consultant indicated, there may never be abetter time than now for fleet service providers to market theirservices to the public sector. He argues that some governmentagencies are complacent when their coffers are full and not veryreceptive to outsourcing proposals. However, with governmentbudgets contracting due to declining tax revenues, public fleetsare looking anew at propositions to sublet certain work.Despite this, there still exist a number of stumbling blocksfor fleet service providers.From the public fleet manager perspective, there is a perceivedloss of control and accountability for services that are nolonger managed in-house. Many public sector fleets are alsomaintained by a union force, which lobbies vigorously, and usuallysuccessfully, against privatization attempts.Some public fleet managers rightly observe that many fleetservice providers often regard them as clients of last resort. Theypoint out that the proportion of solicitations received from fleetservice providers tend to increase when economic times are badand decrease when the economy improves.Another stumbling block is the needless antagonism that iscreated when private sector companies attempt to bypass thefleet manager in soliciting work to be sublet to them. Universally,public sector fleet managers say that a service providerwould be more successful by establishing a relationship with thefleet manager and showing how they can help them.Looking to the Future
Despite these stumbling blocks (and the others discussed inthe August issue), many public sector fleet managers say thatthey represent a receptive market for the fleet services offeredby private sector companies.In the long run, a partnership between public fleets and fleetservice providers can be a win-win situation for everyone.Let me know what you [email protected]

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Mike Antich has covered fleet management and remarketing for more than 20 years and was inducted in the Fleet Hall of Fame in 2010.

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